Tapping into the power of social networks to market to their users has always been an appealing goal for advertisers, but figuring out exactly how to do that has been tricky. Facebook recently settled a class action lawsuit from users of its network who said “Sponsored Stories” turned them into marketing machines, without the fun part of being compensated.

Word of mouth is an attractive principle for advertisers, who aimed to mirror that kind of buzz by turning a Facebook user’s “Like” of say, a certain product or company into an ad that would show up in the right hand section of the page under “Sponsored Stories.”

Bloomberg News says the lawsuit was settled in an agreement with undisclosed terms in a filing yesterday in federal court in San Jose, Calif. Facebook was accused of taking users’ names, photographs and identities to advertise products without permission.

Those “sponsored stories” were called a “misleading advertising scheme,” according to the complaint, as it turned users into marketers but didn’t reward them for turning their friends onto a product or service.